Could you use your timeshare for business lodging and other business purposes? If so, why should you consider it? Business deductions usually produce better tax benefits than personal deductions do, that’s why. Further, you need to know those special tax rules that can make your timeshare a rental property, personal residence, or business lodging facility.

If you own rental property or your business’s building, you need to know what the IRS has in its new set of regulations that define when you have a tax-deductible repair and when you have an improvement that you must capitalize and depreciate. Repair deductions are best, but these are likely a little more difficult to achieve under the new regulations. Also, the new regulations contain a big new break that allows a write-off of the old component’s adjusted basis.

This article answers the question of what happens when you sell your home to your S corporation and then have your S corporation convert that home to a rental property.

If you own rental properties, you need to know how to qualify for real estate professional status, and then you need to create proof of time spent on your rentals. No time-spent proof, no passive-loss deductions. Next, you have to decide to group or not to group your properties. Don’t leave this grouping decision to the IRS or to the courts.

Rental property managers report gross rental income to the property owners on a 1099-MISC. We have seen confusion about this reporting because new laws were enacted in 2010 and then repealed in 2011. This article eliminates that confusion and explains what the property manager needs to report and what the property owner can expect to receive.

On your rental properties, you need proof of your cost allocation to land and depreciable buildings. If you have no proof of that allocation, the IRS has started using the Web to grab the tax assessor’s allocation and use that against your depreciation deductions.

In the right circumstances, the single-member limited liability company (LLC) gives you corporate liability protection combined with easy Schedule C (proprietorship) rules for your tax return. In this article, you learn the two tax advantages and two tax disadvantages to the single-member LLC.

The government subsidizes your rental property profits when you realize all your tax deductions. If tax law’s passive-loss rules deny your current rental losses, your profits will go down. Therefore, you need to know how the passive-loss rules work so you can maximize your rental profits and avoid unpleasant visits with the IRS.

Stay with your mom and dad on a business trip, and create tax deductions by paying them for business lodging. You have a choice: deduct the cost of staying at the big hotel downtown or deduct the cost of staying with your parents. Either way, the choice of location does not change the fact that you are on a tax-deductible business trip.

You trigger business deductions once you start your business. Thus the question: Which triggers do you need to pull for the business to start?

If you own rental property, you need to pay attention to the passive-loss rules. This court case helps clarify two rules that can enable deductions for rental property losses.

The real estate professional exception that can create rental property loss deductions does not apply to properties rented for an average of seven days or less.

You want repairs and maintenance deductions on your business and rental properties. Here are tax tips on finding tax deductions in your lawn, landscaping, and other land improvements.

The repair deduction can substantially outperform the capitalized improvement. The added cash comes from two sources.

Tax law penalizes depreciation deductions, whereas it rewards repair deductions. The impact on your net worth can be huge. This article helps you qualify for the repair deductions that increase your net worth.

Spend a few minutes looking at the list in this article to see what qualifies as a repair. Then spend another minute on the list of improvements. This will help you decide what you need to do to your property.

Repairs to property produce more after-tax cash than improvements do. If you invest in property, you should pay close attention to the rules on what is a repair versus what is an improvement.

The properties owned and the activities of the landlord determine whether the landlord can Section 179 expense a snowblower in whole or in part.

This article contains our Rental Property Analyzer software to help you analyze your possible real estate investments in an absolutely understandable and meaningful way. If you are thinking of buying a rental property, you absolutely, positively must read this article and use this software, which is included in your subscription.

You want to deduct your business, rental, and non-rental losses when possible, because those deductions put cash in your pocket. The sooner you get the cash, the faster you can put that cash to work for you building your net worth. This article helps you realize those losses sooner.

When you are up against the two-out-of-five-year rule for enabling the $250,000 home-sale exclusion ($500,000 if you are married), your strategy might include creating an S corporation to which you would sell your home.

The cabin at the ski hill could be a hotel, a residential rental property, or a personal residence. It depends on your personal use of the property; the length of rental periods; and documentation of your time, others’ time, expenses, and activities.

This subscriber is going to buy a motor home and use it during the first year for travel to and from conventions. In the second year, he is going to convert that motor home to a transient rental property. His plan meets the qualifications for Section 179 expensing and avoids recapture.

Tax law allows an individual to be a real estate dealer with respect to his dealer properties and a real estate investor with respect to his investor properties.

Your lodging property may qualify for one or more of four exceptions that allow Section 179 expensing. The four exceptions override the basic rule that you may not claim Section 179 expensing on property used primarily for lodging or in connection with the furnishing of lodging

Tax savings when renting to relatives depend on your compliance with the tax law’s fair-rent standards and your relatives’ use of the property. Violate these rules and you face the triple whammy of additional taxation.

Doing business in two different locations requires tax knowledge. The purchase of a town house in the second location brings up many tax planning opportunities and a few hazards to avoid.

What happens when you locate an office (home office or other office) in a duplex or apartment building? It’s possible that this location can produce tax-favored depreciation for the home office.

The tax strategy of renting property you own personally to your businesses needs your attention if you want tax benefits. Similarly, special recharacterization rules apply to rentals of land and also when land is a big part of the rental.

The first good news is that you can be both real estate investor and real estate dealer with respect to your real estate portfolio. The next good news is that you are in control, and by knowing just a few rules about dealer and investor classification, you can do much to increase your net worth.

If the passive loss rules are taking away your tax deductions on your real estate rentals, examine the real estate professional rules for an escape. You can be a lawyer, medical doctor, etc., and also qualify as a real estate professional.

You can be a lawyer, CPA, MD, or business owner and qualify as a real estate professional if you or your spouse materially participate in the rentals or in the rental group.

Learn how to qualify for the rental real estate active investor category for deducting rental property losses of up to $25,000. You can plan deductions to lower the $100,000 and $150,000 ceilings.

To deduct your passive losses as a real estate professional, you must prove time spent. Since you need this proof, use these tactics to keep track of your time and also increase your overall profits on the rentals.

If you own rental properties, you don’t want the tax law to call the rentals an investment. Instead, you want the rental properties to qualify as a trade or business so that you achieve tax favored Section 1231 treatment and other tax breaks.

Section 1031 exchanges are perfect when you are going to stay in the real estate rental or investment business. When it’s time to cash out, you need to look at different strategies that help you avoid taxes and give you cash to spend (liquidy).

This article gives you the nuts and bolts of the Section 1031 real estate exchange, including how with proper planning the Section 1031 real estate exchange can be nothing more than the sale of your old real estate and the purchase of the replacement real estate.

If you understate your gross income by more than 25 percent, the IRS can adjust that return for six years, rather than the traditional three-year statutory period for audits. In this clarifying regulation, the IRS explains that an overstatement of basis counts as an understatement of gross income for the 25 percent test.

Your home equity loan can give you a full, partial, or no deduction for your interest. If you will get zero or a reduced benefit, make the necessary changes to protect your tax benefits.

If you are using home equity loan proceeds for your rental property LLC, you need to pay attention to both the legal and tax aspects of that transaction. The legal part is needed for liability protection. The tax part is needed to ensure your tax deductions.

Whenever possible, you want your rental property to avoid the Uniform Capitalization Rules. If you don’t meet the de minimis rule on your improvements to a rental property, you may have to (1) capitalize the interest and (2) capitalize the direct and indirect costs.

Higher inflation could be good for that home you buy today—and if you buy today, you will have today’s low interest rate. That’s a pretty good combination. Then add the 2009 tax credit and get the government to pay you $8,000 for taking the chance. Sounds like you hit the trifecta doesn’t it?

A real estate rental is automatically in the passive bucket if you do not qualify as a real estate professional. In this court case, a real estate agent qualified her real estate agent work time as time spent in a real property trade or business. Thus, she qualified to deduct her real estate rental property losses.

Two tax attorneys told our group that time spent as a real estate agent actually worked against you for the time test (more than 50 percent) to qualify as a real estate professional. The attorneys claimed that in audits the IRS is disallowing the unlimited loss to people who are full-time agents, treating their agent work time as non–real estate time and thus making it just about impossible to meet the 50 percent test.

One of your first tax steps in buying a rental property is to go through each line item in the closing statement and assign it to one of the following three categories: (1) basis, (2) loan acquisition, or (3) operations. With basis, you allocate to land, land improvements, buildings, and equipment. Loan acquisition falls into either costs of getting the loan or costs to reduce the interest rate. The assignments have a direct impact on how quickly you realize the deductions.

The most recent hot entity for real estate ownership is the LLC. The fact that it’s hot does not necessarily make it the best option for you. When considering your choice of entity, examine qualification for single-member LLC status, extra state income taxes, and how this compares with the S or C corporation possibilities.

When a couple owns an LLC, they can obtain the benefits of a section 105 medical plan by filing as a single member LLC.

There are two types of bad debts: business and nonbusiness. Nonbusiness bad debts are deductible in the year the loan is worthless. A business bad debt is deductible either in the year it becomes worthless or to the extent you can prove its decline in value. This is far easier. But, you need to prove your writeoff to get the deduction. We’ll show you how.

Before this new housing rescue law, the savvy taxpayer could convert his old rental or vacation home into a principal residence, live in it for two years, and then sell it to take advantage of the $250,000 and $500,000 exclusion of gain rules. Now, you need to make revisions to that old tax plan to cope with this new law.

Mr. and Mrs. Clark hired a new tax advisor. He told them that because they qualified as being in the real property business, they had available to them the tax law option of “group or not group” your rental properties and that grouping could release tax deductions currently trapped by the passive loss rules.

Good prices and low interest rates make this a good time to buy real estate. Also, tax law favors investing in real estate over stocks and bonds. Use the after-tax adjusted rate-of-return formula to see your after-tax results of your investment.

Rental property treatment starts on the day you place the property in service for rental use, not when you install a tenant. We answer one taxpayer’s questions about reporting a rental house for which he found no tenant.

Don’t waste time and money in a bad retirement plan. Your IRA can accumulate great wealth for your retirement when done properly. A self-directed retirement might be the answer for you.

Learn from Dr. Uy’s mistakes: prepare your taxes correctly. In his case, he should have hired a tax advisor and preparer that would have saved him thousands of dollars. See what you can do to avoid his mistakes.

One taxpayer fixed up a house to sell it for a net loss. To save money on taxes, he can file as a real estate dealer, and not as an investor. Precedents and technical definitions help his case.

If you are single, forming an S corporation can be your “no-hassle spouse.” Rent from the corporation, and you can save money in self-employment tax.

The two most magic words in tax law are “safe harbor.” Why? Clarity! There is nothing better than true clarity in the tax law. The IRS has created a safe harbor for exchanges of homes, and gives us very clear parameters on how to use them.

Learn from one taxpayer’s court case: know the rules about renting to your corporation before claiming passive income.

Carolyn Federson lost all of her rental property loss deductions when the court rejected some of the details of her rental property time records and made its own estimate of the time she spent on her rentals.

One taxpayer is audited, and told incorrect information by an IRS agent. We give her proof to support her position.

As a two-person real estate team, these two taxpayers are real estate dealers, according to the tax law. They have two choices: file as a partnership or as an S corporation.

Tax law treats foreclosure on your rental property as a sale of your rental property. When you sell a rental property, you have a capital gain or loss, or a Section 1231 gain or loss. This differs from a home.

The ability to deduct rental property losses can alter investment returns by as much as 40%. In many cases, the ability to deduct the losses can make the sole difference in making a profit or incurring a loss on the rental.

If you own a condominium, cottage, cabin, lake or beach home, ski lodge, or similar property, tax law might consider your property a hotel. The purpose of this article is to alert you to the tax issues that surround a vacation-home hotel.

To win your rental property deductions you need proof of the time spent. This taxpayer had inadequate proof.

Dealer versus investor tax status is a heavily litigated issue. Choosing between dealer or investor status is often a tough call, as is in the case of this taxpayer. There can be a huge tax difference between classification as a dealer or classification as an investor.

To deduct things in a home office, they must be used exclusively for business use. Not one minute can be personal use. Should you have a use that fails the exclusive business-use requirement, that one failed use disqualifies your home-office deduction.

One subscriber asks about making a corporation for his rental houses, and then using a proprietorship to do the management. He would charge a fee to the rentals. We don’t think this is a good idea because it will increase his taxes.

The slowdown in housing means it’s a buyer’s market. If you have the capital, it’s time to invest. Follow our strategy to see how to best take advantage of the recent economy.

Not reporting the 1099 information is always a mistake. If you have a rental property that you rented less than 15 days this year, it is not taxable. If you do get a 1099, you should include it in your tax return, but follow our strategy to avoid any problems.

If you make repairs to your home for the purpose of making the home a rental property, you may deduct them, if you do it right. You cannot, for example, deduct repairs made to your home (not rental property). You might also consider filing the improvements as capital expenditures.

Schedule E allows wages, but it does not have a separate line item for them. So, when you are hiring your spouse to work on your rental properties, file the work as “ordinary and necessary expenses to save money on taxes.

This real estate boot camp deduction is allowed to the taxpayer who is classified as being “in the business” of renting real estate, but not to the taxpayer classified as an “investor in real estate.”

Although IRS publications give you no guidance, you may deduct mortgage insurance on your rental properties. The IRS confirms this in its answers on its Website.

New rules increase the tenant’s ability to first use shorter depreciation periods during the life of the lease and then write off the undepreciated balance of leasehold improvements at the end of the lease. The proper application and intertwining of the new rules enable both landlords and tenants to put cash in their pockets.

The tax rules make your vacation home either a personal residence or a rental property. When you qualify the vacation home as a rental property, you then may use the Section 1031 rules to defer taxes and build more net worth.

To treat your rental property as a tax shelter and deduct your rental property losses against non-passive income, you first need classification as a real estate professional and then you need material participation on the individual properties, or if grouped, on the group. Good and proper tracking of time spent by you and, if married, your spouse is required to prove both your real estate professional status and material participation.

Taxpayer sells this rental property for $199,000 with $6,000 in closing costs. He paid $118,500 for the property over 10 years ago and has claimed $50,000 in depreciation deductions. As part of this sale, the taxpayer takes back a second mortgage in the amount of $19,400 payable in five years with interest paid annually at 10 percent a year. There are five easy steps to this installment sales tax calculation.

How you depreciate property has significant effects on your after-tax cash realization. Further, the punitive effects of depreciation recapture taxes make the Section 1031 exchange possibilities more and more appealing. That’s why it is important to remember the eight financial planning principles about depreciation.

Tax benefits for the bed and breakfast require adherence to the transient, vacation home, and hotel rules. Under these rules, personal use can destroy deductions. Further, the length of transient stays determines the types of services you need to provide, if any, to qualify the bed and breakfast for tax-favored hotel benefits.

At a meeting of landlords, the guest lawyer stated that the S corporation terminates with too much passive income. Many attendees heard this comment incorrectly. The too much passive income termination problem applies to S corporations which were previously C corporations.

The properly used business condo does not run up against the vacation-home, passive-loss, or entertainment-facility rules.

You may have heard that options are the perfect way to increase profits on real estate investments and rentals. Well, perfect is probably an overstatement, but good profits are available when you know what you are doing. You also need to know the tax rules to avoid clauses and events that can cause taxes when you least expect them.

Shared equity is tax law’s officially designed rent-to-own your home program. For this to work, it takes two parties: (1) a landlord-investor and (2) a tenant-investor. The landlord-investor benefits because he has no vacancies, few hassles, no management fees, and a known cash flow. The tenant-investor benefits because he gets into this home with little or no down payment, builds equity while paying rent, and gets detailed knowledge about the property while living there. At some agreed future point in time, the landlord-investor sells his or her interest in the property to the tenant-investor or the two of them sell the property to a third party.

Personal use of your bed and breakfast includes use by your tax-law defined relatives, including those relatives who pay fair rent.

Historic rehab tax credits can put you in Donald Trump’s self-proclaimed favorite spot. Tax credits often exceed the cash you invest in the project making the historic rental or office building a “nothing down” deal for you. Add nonrecourse financing to the package and you have no personal risk. None of your cash in the deal and no personal risk—this is Mr. Trump’s favorite spot. You might do as many Congressional leaders do: Donate your personal home’s historic facade to charity so can realize big tax credits.

When you receive property in which you had an interest as a result of a family member’s death, make sure you clarify your income-tax basis in this property right away.

The security for the loan does not determine if the interest is tax deductible or not.